[LocalPCGuy]

The TARP program was 800 billion dollars, not in the trillions. Not sure where you are getting the 4.7 trillion figure from.

The problem wasn't really the bad debt. The problem was one of confidence, and putting the money into the banks restored that confidence.

As repugnant as it seemed, and still seems, to give that money to the bankers that created the problems, it was likely the right move at the time. We'll never really know since we can't go back and try the other way, but things were grinding to a halt, and putting money in people's hands was it going to move things quickly enough.

[arcseco]

4.7t is probably in reference to QE, which in part was used by the central Bank to purchase mortgage backed securities, the rest spent to supress bond yeilds. Banks ostensibly offloaded their poor performing mbs's onto the average citizen who earns and spends in USD. When the central Bank decides to invent trillions to support poorly managed debt obligations it is debasing the value of your earnings potential. The act should be vigourusly debated and the method by which the funds are dispursed should be scrutinized heavily.

>The problem wasn't really the bad debt. No, it was a problem of bad debt, poorly managed securities specifically MBS lead to a Ponzi like situation that should have been allowed to wind down instead of propped up. Lenders should have bit the bullet and lessons should have been learned. The political fallout from the decision to put off the the inevitable are only starting to become manifest in current politics.

I live in Canada where atypical interest rates as a result of lockstep CB policy with the US has completely distorted our real estate market. The result is going to be a lost generation that lives at home for a decade longer than their parents. This is all the result of fiscal policy trying to hold up the remains of the 2008 crisis instead of raising the problem to ground and starting again with a more humbled outlook. The Piper will be paid, it's just a matter of when, and who will be paying.